Master Telephone Socket Wiring

Please see picture attached. The thick black cable used to supply a second line upstairs, but is now disconnected at the exchange. However I was wishing to use it to make the upstairs point an extension on my one and only line.

Could I cut the orange, and white cables (which are redundant as they link to the main incoming line), and use them in slots 2,3,4,5 in conjunction with the spare black and green cables to get the upstairs working as an extension?

I do currently have the upstairs point wired into the master as an extension but its with indoor white cable running up the outside of the house so I would disconnect this if I could get the proper black cable to work

Yep, that is fine. Swap the other socket to a secondary type obviously.

Any isolation needed to the orange and white on the main incomer or is it ok to leave them curled up at the back of the box?

Just leave them disconnected and coiled up.